An alert reader tipped us off to the latest development on the bond insurer front. As Reuters tells us, while XL’s insurance subsidiaries are not bond insurers, the are exposed to bond insurer Security Capital via a reinsurance/investment relationship. XL’s senior debt was downgraded one level to Baa1. From Reuters: Moody’s Investors Service on Friday […]
Read more...Although we have been skeptical of the bond insurer rescue efforts led by New York state insurance superintendent Eric Dinallo, a report today by Bloomberg claimed progress was being made with the monoline insurer deemed most in need of assistance, Ambac. From Bloomberg: New York Insurance Superintendent Eric Dinallo is trying to organize a bank-led […]
Read more...I should never underestimate the relentless optimism of US equity investors (or perhaps the cleverness of MBIA’s flacks picking the middle of the night to release a fourth quarter earnings announcement that fell considerably short of already-low expectations). Thursday we had the remarkable spectacle of MBIA CEO Gary Dunton making statements that can only be […]
Read more...The turn of phrase in financial reporting can sometimes be a hair misleading. Today’s Bloomberg story reporting on marked price increases in the credit default swaps market in the wake on news overnight from MBIA and Standars & Poor’s, starts out by saying, “The risk of companies defaulting soared…..” No, the risk of companies defaulting […]
Read more...Why MBIA issued its earnings press release at such a weird hour is beyond me. The related news stories are time stamped 0:56 AM at Bloomberg and 1:08 AM at the Wall Street Journal. Saving bad news till the middle of the night is not going to alleviate the reaction. Or perhaps MBIA has an […]
Read more...Things seem to come full circle. 30% to 70% of the subprime loans issued in 2006 that later defaulted involved borrower fraud, according to the FBI, although people would say in many cases it might more accurately be called lender fraud (“oh, just sign the application, we’ll fill it out for you”). The FBI is […]
Read more...In an interview with the Financial Times, Merrill CEO John Thain said that he didn’t believe an industry-wide approach to rescuing the bond insurers would succeed. Thain instead advocated investments on a company by company basis. But the estimates of loss exposures are now coming in so high that it is difficult to conceive that […]
Read more...Bloomberg reports that hedge fund Pershing Square’s chief Bill Ackman has increased pressure on bond insurers and regulators by circulating a new analysis of potential losses to MBIA and Ambac, the two biggest bond insurers, that concludes the damage to each could reach $11.6 billion. This calculation is arguably more accurate than Ackman’s previous estiimates, […]
Read more...The bad numbers get bigger all the time. This eyepopping $534 billion figure for the amount of debt that Standard and Poor’s plans to either downgrade or put on negative watch was released a couple of hours ago after the exchanges were closed (sorry, I saw it but was unable to post till now). The […]
Read more...John Dizard, in “Prepare for return of a direct lending world,” argues that central bankers believe that securitization is not coming back in any meaningful way in the foreseeable future, and banks will therefore have to roll up their sleeves and do old-fashioned lending in much greater volumes than before. That may seem like a […]
Read more...While there was not much in the way of new developments on the bond insurer front on Tuesday, the media chatter features some interesting cross currents. On the one hand, the Financial Times, which had some relatively upbeat coverage the day before, had an article on the impressively large level of short interest in the […]
Read more...$14 billion? I thought I’d be inured to big negative numbers coming from investment banks by now, but I caught my breath when I read the headline of the Bloomberg story reporting that UBS is taking a further $14 billion in writedowns, resulting in a $11.4 billion loss for the fourth quarter. Remember, when UBS […]
Read more...Reader Carl about ten days ago had sent me a link to a Federal Reserve data series “Aggregate Reserves of Depositary Institutions Adjusted for Reserve Requirements.” The series goes back to 1975. What caught Carl’s attention was that the “”non-borrowed reserves” column, under the “not seasonally adjusted” heading, to the right, shows negative values for […]
Read more...Readers know that we’ve expressed doubts that a rescue plan for the struggling bond insurers will even come into being, so the idea that it would be too late is safer bet. Although it is possible the rating agencies will be pressured into holding off further on their long-overdue downgrades, they’ve been under that sort […]
Read more...Despite the seeming absence of news on the bond insurer rescue front (the only development reported was the selection of the boutique M&A advisory firm Perella Weinberg to assist the State of New York in its efforts to put a deal together), the Financial Times has four articles on it today, from the neutral to […]
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